NCR Corp. (NCR) Tops Q2 EPS by 6c, Revenues Beat

NCR Corp. (NYSE: NCR) reported Q2 EPS of $0.27, $0.06 better than the analyst estimate of $0.21. Revenue for the quarter came in at $1.48 billion versus the consensus estimate of $1.43 billion.

• Revenue of $1.48 billion, down 13% as reported and down 12% constant currency
• Recurring revenue up 5% as reported and up 7% constant currency
• Accelerating shift to recurring revenue
• Cash flow provided by operating activities of $229 million; Free Cash Flow of $171 million
• Cash and cash equivalents of $1.68 billion as of June 30, 2020
• GAAP diluted EPS of $0.44; Non-GAAP diluted EPS of $0.27
• Business continued to be impacted by COVID-19 as expected

“In the second quarter, we further advanced our strategy, including strong recurring revenue growth and free cash flow generation, as we executed at a high level in an operating environment that was negatively impacted by COVID-19,” said Michael Hayford, President and Chief Executive Officer. “When the pandemic began, we focused on three priorities, protect our employees, help our customers and protect the company. We believe we have been successful on all three priorities, and the actions we have taken have allowed us to manage during the crisis and advance our offerings.”

Mr. Hayford continued, “Customers across our markets are looking for new and safer ways to transact with consumers, and our contactless digital first solutions are increasingly gaining traction. Our introduction of new contactless offerings demonstrates our ability to rapidly innovate, the flexibility of our platforms and our commitment to adapting to evolving customer needs. In addition, our financial position is strong and we believe we can continue navigating the near-term challenges. We expect to emerge from this pandemic with even stronger customer relationships and a solution set positioned to further capitalize on changing consumer preferences.”

Full Year 2020 Outlook and Impact from COVID-19

We continue to navigate through the challenging times presented by COVID-19, with a sharp focus on safeguarding our employees and helping our customers. Despite the unprecedented environment, our teams are executing at a high level and we are further advancing our strategy. Given this rapidly evolving environment, as previously stated during the first quarter of 2020, the Company’s outlook for 2020 previously provided on February 11, 2020 has been withdrawn, and investors should no longer rely upon that guidance.

While it is difficult to project how deep the pandemic will be and how long it will last, we do expect it will negatively impact our business for the remainder of 2020 and into 2021. We expect our Hospitality and Retail segments to be the most impacted by the COVID-19 pandemic, but do expect our Banking segment will also experience negative impacts. We expect our hardware revenues to be most impacted while our recurring revenue stream is expected to be more resilient.

In order to build a stronger liquidity position, we have taken steps to improve working capital and are addressing certain business impacts with spending cuts. As noted on our first quarter 2020 earnings call, we have taken several steps to build our cash reserve to improve our financial liquidity and flexibility, and provide a cushion to help weather the impacts of the pandemic. These steps include suspending our share repurchase programs, limiting our mergers and acquisition activity, reducing salary for members of our leadership team and certain salaried employees, reducing our planned capital expenditures, eliminating most contractors, curtailing travel, and freezing merit increases and hiring. Enabled by these steps, as well as the $400 million senior unsecured notes issued on April 13, 2020, we ended the second quarter of 2020 with a cash balance of $1.68 billion, which increased $467 million from the first quarter. The COVID-19 pandemic is complex and rapidly evolving. The ultimate impact on our overall financial condition and operating results will depend on the currently unknowable duration and severity of the pandemic, as well as any additional governmental and public actions taken in response. There can be no assurance that the measures we have taken will offset the negative impact of COVID-19.

For earnings history and earnings-related data on NCR Corp. (NCR) click here.

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